RE: Ruvuma: the undisputed, biggest game in town for even longerToday 13:08
The proposal "completely blew the project economics out of the water" and "we remain ready to continue to work with the government on competitive and investable agreements" says it all. The Government obviously want's a bigger cut of profits, as that is what they have promised their people. But there's $42 billion in investment that will need paying back, and as far as the operator is concerned, that $42 billion needs to be paid back over a reasonable timescale. So who will win? At the moment the operator has the upper hand because they are not going to invest $42 billion unless they get the right deal to pay it back whilst also giving them a profit that justifies all the effort and funding.
From the news item:
"The proposed amendment to the Host Government Agreement intends to ensure that truly both sides benefit fairly in the whole deal and nothing else," Matinyi said in a statement to Reuters, without providing details about the amendment.
"We hope that our experts and officials will conclude the amendments sooner than later to allow this important project to go ahead."
A source from one of the investors said the amendment was proposed by Energy Minister Doto Biteko after he assumed the post last August. Biteko also serves as deputy prime minister.
, said the source, who asked not to be identified. The source added that remarks last month to parliament by Biteko saying the government expected to conclude negotiations in the coming fiscal year were "certainly optimistic".
A second source from another investor agreed with the first source's account. Neither source provided details about the amendment.
An energy ministry spokesperson did not respond to a request for comment.
A Shell spokesperson told Reuters that after initialling the deals with the government, the company "had hoped to see these agreements signed faster, but we remain ready to continue to work with the government on competitive and investable agreements, consistent with what we agreed last year".